JP Morgan Strategist's "Trapped Money" Warning and Market Context (2026-01-05)

This analysis is based on the Fox Business YouTube segment featuring David Kelly [1] and market data from the Ginlix Analytical Database [0]. On January 5, 2026, Kelly warned about “trapped money” in the market, but the exact assets or sectors he referenced remain unknown due to the failure to access the video transcript. However, market performance around the event provides critical context:

• Indices
  : The Dow Jones Industrial Average rose 1.09% to 48,977.19, the S&P 500 gained 0.14% to 6,902.04, and the NASDAQ Composite declined 0.23% to 23,395.82 [0].
• Sector Performance
  : The Utilities sector was the worst performer (-3.19%), followed by Energy (-2.64%). Industrials (+2.34%) and Financial Services (+2.20%) led gains [0].
• ETF Trends
  : The Utilities ETF (XLU) declined 5.24% from December 1, 2025, to January 5, 2026 (period open: $45.06, close: $42.70), while the Energy ETF (XLE) gained 3.53% over the same period [0].

The Utilities sector’s extended decline is consistent with rising interest rate expectations, which negatively impact high-dividend utility stocks. This sector is a likely candidate for what Kelly may have referred to as “trapped money”—investors holding underperforming defensive assets amid a shift toward cyclical industries [0].

1. The Utilities sector is the most probable focus of Kelly’s “trapped money” warning, given its significant underperformance in the weeks leading up to the interview.
2. The sector decline reflects a broader market rotation: investors are moving away from defensive assets (like utilities) to cyclical sectors (industrials, financial services) amid improving economic growth prospects [0].
3. Rising interest rate expectations are a key driver of the Utilities sector’s poor performance, as higher rates reduce the appeal of high-dividend stocks relative to fixed-income alternatives [0].

• Utilities Sector Risks
  : Investors holding utility stocks face ongoing risks from rising interest rates and potential sector-specific regulatory changes, which could further erode performance [0].
• Sector Rotation Risks
  : The shift from defensive to cyclical sectors may continue, potentially trapping investors in underperforming assets if they fail to adjust their portfolios.
• Market Volatility
  : Uncertainties around interest rates, economic growth, and geopolitical events could exacerbate market trends and increase the risk of trapped capital.

• Cyclical Sector Strength
  : Industrials and Financial Services sectors showed strong performance on January 5, 2026, suggesting potential opportunities for investors positioned in these areas [0].

• J.P. Morgan’s David Kelly issued a warning about “trapped money” in the market during a Fox Business interview on January 5, 2026 [1].
• The exact details of his warning are unavailable due to the inability to access the video transcript.
• Market data points to the Utilities sector as the most likely focus of his comments, given its extended decline driven by rising interest rate expectations [0].
• Investors should monitor interest rate trends and sector rotation dynamics to better understand the potential implications of Kelly’s warning.